National lay offs 400; sees PC comeback ahead

Electronic News, April 8, 1996 by Crista Hardie

Santa Clara, Calif.--In its first company-wide staff reduction since Gil Amelio cleaned house in 1991, National Semiconductor said it will lay off 400 workers worldwide--mostly at its Santa Clara headquarters--in order to cut costs this quarter. National said it will take a one-time charge of $20 million to $25 million to pay for the layoffs and related equipment losses in 4Q96, which ends May 26.

The company said it continues to feel the impact of a downturn in the PC components market, even after enduring third quarter cost cutting measures that included a mandatory five days off for most employees (EN, Antenna, Jan. 15) and slowing a wafer factory expansion (EN, March 11).

More cutbacks may be on the horizon in the coming months as the company weeds out the less productive areas of its business. While National expects a full recovery of the PC market--after a few more soft quarters--a spokesman said the company is no longer expecting to have a year-to-year growth rate in 1997 to match the expected 20 percent growth of the overall industry.

National is not alone. Cirrus Logic and Weitek both recently announced significant layoffs, said to be tied to a broader slowdown in the semiconductor market (EN, March 25). And last week AMD reportedly released an internal memo announcing a company-wide hiring freeze and a possible eight-day mandated vacation period this summer.

National's 400-person reduction amounts to about 2 percent of its worldwide employee base, hitting administrative and factory overhead areas, including a few production line workers. But, while some production will slow down--namely of Super I/Os and chips for computer monitors and flat panel displays--production lines will not stop, a spokesman said.

"The layoffs tend to hit the areas that are not involved in analog and mixed-signal or our Ethernet lines," the spokesman said. "We can't make enough of our 10/100 megabit Ethernet chips, and some of our wide area network (WAN) products are going full throttle."

In a statement from the Office of the President, National said, "(w)e are making every effort to protect our core engineering capability and our strong worldwide sales force."